India's New Pipeline Tariffs To Boost Gas Use In Far-Flung Areas

India will cut gas pipeline tariffs for areas far from gas injection points as the nation seeks a cleaner fuel-led industrial development across the country, an official at the Petroleum and Natural Gas Regulatory Board said. Differential pipeline tariffs is one of the key reasons for uneven gas use in the country, which aims to raise its share in energy consumption to 15% by 2030. Gas accounts for about a quarter of energy-mix of the western state of Gujarat, which hosts three liquefied natural gas (LNG) import terminals and is near to gas producing fields, compared to the national average of 6.2%.

"Customers will be paying single tariff if they are linked to the national gas grid of more than 15,000 km. This will help customers in the north, northeast and eastern part of the country," Board member Satpal Garg said on Friday.

The new rules are expected to come into force in next 2-3 months, he said. At present, the tariffs are linked to the distance and the number of pipelines used for transportation of gas from the injection points, making the fuel costly for many industries and hurting the development of far flung areas.

"The new structure will be beneficial for all industries using multiple pipelines for gas purchase," he said.

For an industry taking supplies through a single pipeline and located within 300 km of gas injection point, the new tariff will be about 26 rupees per million British thermal unit (mmbtu), an increase of up to 30% from current rates, he said.

For others tariffs would be 66 rupees/mmbtu compared to over 100 rupees/mmbtu in some cases, he said, adding a shift to uniform rates would help Oil and Natural Gas Corp's get better prices of its east coast gas.

For pipeline operators like GAIL (India) and Gujarat State Petronet Ltd the new rules will be revenue neutral while fuel costs for fertiliser plants and others in eastern and southern India will be reduced, he said.

"In the long run pipeline companies will get the benefit as gas volumes will go up," he said.